1. Field of the Invention
The present invention generally relates to multi-product clock auctions and more specifically to optimizing price adjustments and rollbacks at each round of a multi-product clock auction.
2. Description of the Background Art
In a multi-product clock auction, bidders place bids on products during different rounds. A different number of eligibility points per unit are assigned to different products being auctioned. Bidders participating in the multi-product clock auction are also assigned eligibility points specifying the total amount of products on which a bidder may bid. For example, if a first product is assigned two eligibility points per unit, a second product is assigned one eligibility point per unit and a bidder is assigned an initial total eligibility of ten points, the bidder can initially enter a bid for up to five units of the first product, for up to ten units of the second product or for a combination of the first product and the second product whose total points do not exceed ten. A bidder's “activity” during a round of the auction is the total number of points associated with a bid during the round, and generally the bidder's eligibility is the upper bound of the bidder's activity.
During rounds of the multi-product clock auction, an auction manager receives bids from one or more bidders. Prior to the start of the first round, an auction manager announces, or otherwise notifies participating bidders, of an initial price for the products being auctioned. During the first round, each participating bidder places a bid, and bids placed after the end of the first round and before the start of a subsequent round are not entered. In a clock auction where the auctioneer seeks to buy a product, a bid is an offer to supply quantities of the offered products at the announced prices for the round. In a clock auction where the auctioneer seeks to sell a product, a bid is an offer to purchase quantities of the offered products. A bidder's bid in the first round may be limited so that the bidder's activity does not exceed the bidder's eligibility.
At the close of a round, such as the first round, the auction manager announces the round results and a list of prices to the bidders. The auction manager may also provide additional information about bid quantities, the identities of the bidders or other information. At the close of a round when an auctioneer is buying a product, the auction manager decreases prices of products for which there is excess supply, that is, products for which the sum of the quantities offered exceeds the quantities sought or demanded. Such a product is described as an “oversubscribed” product. At the close of a round when an auctioneer is selling a product, the auction manager increases prices of products for which there is excess demand, that is, for which the sum of the quantities demanded exceeds the quantities offered or supplied to the auction. Such a product is described as an “oversubscribed” product. The auction manager does not adjust the prices of products that are not oversubscribed.
Once a round closes, one or more activity rules are used to determine the eligibility of different bidders for the subsequent round. Often, a bidder's eligibility for the subsequent round is the bidder's total activity from the previously completed round. In some clock auctions, the auction manager may retain offers from an earlier round and count the retained offers as offers from a previously-completed round to prevent products from becoming undersubscribed. In a clock auction where an auctioneer is buying a product, an undersubscribed product is a product for which there is an excess demand, while in a clock auction where an auctioneer is selling a product, an undersubscribed product is a product for which there is an excess supply. Offers retained to prevent undersubscription are counted towards the eligibility of the bidders whose offers were retained for the subsequent round.
After completion of a round and prior to the start of the subsequent round, the auction manager informs bidders of the product prices for the subsequent round and the schedule for the subsequent round. During subsequent round, bidders submit offers in the round that do not exceed their eligibility for the round and bids received after close of the round are not counted. The auction continues as described above as long as at least one product remains oversubscribed. When no product is oversubscribed, the auction manager ends the clock auction and awards products to the bidders making offers in the last round. If the offers made in the last round fail to meet the target volume for a product specified by the auctioneer, the auction manager can award products to offers made in the penultimate round.
In a procurement multi-product clock auction where an auctioneer is purchasing one or more products, prices of products for which there is excess supply generally decrease. In a sale multi-product clock auction where an auctioneer is selling one or more products, prices of products for which there is excess demand generally increase. After any price modification, a product can go from being oversubscribed to being undersubscribed. Without adjustment of price modification, an auction starting with significant oversubscription can end with undersubscription of certain products, i.e., receipt of insufficient bids for certain products. Thus, without adjustment of price modification, an auctioneer may sell much less than buyers may want or an auctioneer may purchase much less than sellers are willing to offer. As an example, in a procurement auction having a starting price of 10 for multiple products and 10 units needed of each product, there may be offers in the first round for 20 units of each product. In the second round, the price of each product may decrease to 9.5 and offers for 5 units of a first product and 35 units of a second product may be received. If the auction manager stops the auction for the first product while continuing the auction for the second product, the first product may end up as undersubscribed despite ample interest. To prevent undersubscription, the auction manager may want to roll back some prices, such as retaining 5 units of first round offers for the first product at a price of 10 while letting the price of the second product decrease to 9 for the subsequent round.
More generally, an auctioneer may not have a pre-determined set of quantities for the auction. For example, if the multi-product clock auction is conducted by an electricity purchaser seeking to meet its power needs, the electricity purchaser may be able to meet its needs by purchasing power from any of several different locations subject to different transmission costs, transmission losses and different transmission constraints applying to electricity from different locations. The electricity purchaser may take bids for power at a first location and at a second location and determine the quantity to take from each location depending on the offered prices, making determination of oversubscription and undersubscription ambiguous while amplifying the need for a procedure to adjust prices between rounds and possibly roll back prices, if necessary.